Correlation Between Globe Trade and Asseco Business

Can any of the company-specific risk be diversified away by investing in both Globe Trade and Asseco Business at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Globe Trade and Asseco Business into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Globe Trade Centre and Asseco Business Solutions, you can compare the effects of market volatilities on Globe Trade and Asseco Business and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Globe Trade with a short position of Asseco Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of Globe Trade and Asseco Business.

Diversification Opportunities for Globe Trade and Asseco Business

-0.54

Correlation Coefficient

Globe Trade  Asseco Business

Excellent diversification

The 3 months correlation between Globe and Asseco is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Globe Trade Centre and Asseco Business Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asseco Business Solutions and Globe Trade is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Globe Trade Centre are associated (or correlated) with Asseco Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asseco Business Solutions has no effect on the direction of Globe Trade i.e., Globe Trade and Asseco Business go up and down completely randomly.

Pair Corralation between Globe Trade and Asseco Business

Assuming the 90 days trading horizon Globe Trade Centre is expected to under-perform the Asseco Business. In addition to that, Globe Trade is 1.16 times more volatile than Asseco Business Solutions. It trades about 0.0 of its total potential returns per unit of risk. Asseco Business Solutions is currently generating about 0.12 per unit of volatility. If you would invest  5,720  in Asseco Business Solutions on November 20, 2024 and sell it today you would earn a total of  1,280  from holding Asseco Business Solutions or generate 22.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Globe Trade Centre  vs.  Asseco Business Solutions

Globe Trade Centre

Risk-Adjusted Performance

Very Weak

Over the last 90 days Globe Trade Centre has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Asseco Business Solutions

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Asseco Business Solutions are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Asseco Business reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Globe Trade and Asseco Business

The main advantage of trading using opposite Globe Trade and Asseco Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Globe Trade position performs unexpectedly, Asseco Business can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Asseco Business will offset losses from the drop in Asseco Business' long position.

The idea behind Globe Trade Centre and Asseco Business Solutions pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.